The Most Common E-Commerce Mistakes Part 1

It’s easy to think that installing WooCommerce or setting up a Shopify store will allow you to start selling immediately. Even having an agency do it for you won’t automatically make your endeavor a success.

There are so many things to take into consideration when setting up an online store. Too many for just one blog post. However, I will list some of them here that are most common and will hopefully yield you an increased return on investment in line with the Pareto principle.

Bringing in the Crowds Too Early

More people, more sales. While it may seem like the most basic vector for increasing profitability, it’s not without it’s caveats. Consider how you are promoting your store. Paid acquisition, SEO Optimization, Link Building and Influencers are incredibly expensive ways of bringing traffic to your site and will quickly eat away at your margins. If your conversion rate, the percentage of unique users that buy something, is below a 2% then this may be money ill spent.

It is extremely important to eliminate any impediments that would otherwise be the cause for someone not to make a purchase. If you have tested your site thoroughly, and you have made sure there are no technical errors that are preventing people from make a purchase, then it is more likely a problem with they way your information architecture is laid out; users can’t find what they are looking for.

Making sure products are properly categorized, labeled, tagged, with detailed descriptions and descriptive images is paramount. However, even the most detail oriented shopkeepers can miss the forest for the trees, leaving an extremely hard to navigate product catalog with little to no guidance. Depending on the complexity of you product, there are many tools you can use help users navigate to what they are looking for.

Not Having a Proven Market

Sometimes your own ideas can be very tempting to monetize. The idea of making money while you sleep is a very lucrative one and many people aspire to this dream. So much so, that people are willing to be their entire savings or risk their careers in order to reach their goals. However, most of the time they did not take the time to test the market.

Companies with a proven physical retail presence are often exempt from this as they have an established market. Most of the time, what people will buy in a local store can be converted to an online version using the allure of improved convenience. However, this conversion can fall short because the negatives of online experience outweigh the physical experience. Products might be too complex or expensive, but even here there are ways to use an online experience advantageously. You could use it to generate valuable leads or vend subsets of your actual business.

However, sometimes people come up with an idea or concept that is won’t sell anywhere. The ease of setting up an online e-commerce presence leads many to attempt it without considering the true cost. The dream of selling their idea online is quickly in jeopardy prompting further futile investments.

Instead, it is much better to test it with a sound and rational mindset with a minimal investment. A good way to do it is to try and sell to friends first, then over social media through personal posts, and continue from there. If there is an established demand, it may be worthwhile investing further time and money into your store or product. If not, be prepared to shift focus or kill the idea completely.

Focusing on Acquisition When it Should Be Loyalty

Knowing which mode you are can be pivotal in what areas you should invest in. Should you be focusing on driving customers to your store or should you be focused on bringing them back?There are generally three types of modes a store should be in:

1. Acquisition mode, focus on driving new customers
2. Hybrid mode
3. Loyalty mode, focus on making the same customers buy again

You can easily determine which one you are. If less than 40% of your customers will buy again within the same year, you should focus on acquisition. If 40-60% will purchase again within the same year, then you are in hybrid mode. If more than 60% of your customers will make a purchase within the same year then you should focus on loyalty.

To better describe the different scenarios I will give a few real world examples. A store that should be in acquisition mode would be an online camping goods retailer. The likelihood of someone needing a new tent or hiking boots every year is pretty small. On the other hand, a typical loyalty based store would be selling products that need replenishing frequently, for example a store specialized in selling coffee beans and grounds.

If you are just focusing on bringing in new customers when are selling highly priced consumable products, you will quickly find that there is a lot of revenue left on the table. Incentivizing your customer base to stick with you will bring you a lot of repeat business with a few one time investments.

Summary

I hope these experiences bring you an advantage, and at least prevent you from making the same mistakes as most aspiring e-commerce business owners do. Don’t hesitate to contact me if you would like help with your business!